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WSET L4 D2 2024 > 5. Retail > Flashcards

5. Retail Flashcards

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1
Q

What are the different factors within the retail sector

A
  • Supermarkets
  • Deep discounters
  • Convenience Retailers
  • Specialist wine retailers
  • Hybrids
  • Online retailing
  • Global travel retail
  • Wine investment Companies
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2
Q

What are the advantages of selling wine in supermarkets

A
  • Largest market share in wine sale = large volumes of wine
  • Market exposure
  • When buying directly, no intermediary costs
  • Private label wines promote customer loyalty
  • Expert winemaker employed by supermarkets ensure quality
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3
Q

What are the disadvantages of selling in supermarkets

A
  • Supply exceeds demand = extreme negotiating power = lower profits
  • Additional fees for desirable product placement and marketing
  • Contracts regarding quality = possibility to be left with wine that can not be sold
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4
Q

What type of wine is sold at supermarkets

A
  • Well-known brands like Jacob’s Creek and Barefoot help attract customers to buy wine
  • Well-known regions and grape varieties, in a style that appeals to wide public
  • In wine-producing countries local wines will dominate
  • In Whole Foods (premium), wines from artisan producers with their own label will appeal consumers with interest in wine
  • Own-Brand wines (e.g Sainsbury’s Taste the Difference in UK)
  • Private label wines
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5
Q

Give examples of Deep Discounters

A
  • Germany: Lidl and Aldi
  • Denmark: Netto
  • USA: Trader Joe
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6
Q

How do deep discounters keep their prices low

A
  • Relying on volume of sales rather than profit margin
  • Basic shops
  • Away from prime locations for lower rent
  • Limited product range
  • Private label products
  • No major brands with large marketing budget
  • Buying without intermediary
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7
Q

Give an example of a deep discounter private label wine

A

Charles Shaw “Two Buck Chuck” for Trader Joe

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8
Q

How much people buy wine from deep discounters

A

In the UK
2012: 23%
2018: 37%

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9
Q

What are convenience retailers

A

Smaller shops, open for longer (sometimes 24h). Located near where people live. Sometimes independent, sometimes franchise

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10
Q

What are the advantages of convenience retailers

A
  • Open for longer (sometimes 24h)
  • Closer to where people live
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11
Q

What are the disadvantages of convenience retailers

A
  • Usually smaller
  • Usually more expensive
  • In proportion costs are higher: rent, more staff
  • When franchise, operator has to pay a fee to owner
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12
Q

Give examples of convencience retailers

A

Independently:

  • In India they make up a big part of the market

Franchise:

  • Spar in 34 countries
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13
Q

What are specialist wine retailers

A
  • Sometimes combined with premium spirits and beer
  • Sometimes combined with artisan products such as cheese and delicatessen
  • Sometimes specialised in particular region/country
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14
Q

What are the advantages of specialist wine retailers

A
  • Attractive for lesser known/smaller producers
  • High involvement consumers = higher prices
  • Higher prices = higher producer margin
  • More personal service for regulars
  • Hand sell: story, information, food and wine pairing
  • Tastings, educational classes, etc
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15
Q

What are the disadvantages of specialist wine retailers

A
  • More expensive
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16
Q

Give examples of specialist wine retailers

A

Organic, biodynamic, natural wines:
- La cave de Papilles Paris

Fine wine retailers (premium and primeur):
- Hedonism UK

17
Q

What are hybrids

A

Specialist wine retailers with a bar area, serving food like cheese and delicatessen, and sometimes substantial dishes

18
Q

What are the advantages of hybrids

A
  • Consumers can try wine before purchase
  • Regurlarly changing wine by glass showcases also lesser known regions/varieties
19
Q

What are the disadvantages of hybrids

A
  • May need to stay open longer
  • Additional staff
  • Bureaucracy
20
Q

Define “Bricks-and-mortar” retailers

A

Retailers like supermarkets and specialist wine retailers, who offer online and offline sales combined

21
Q

How much sales go through online retailing

A

In China 20%
In USA 2%

22
Q

What are the advantages of online retailing

A
  • Larger customer base
  • No need for expensive shops
  • Warehouses outside of centre
  • Additional information available
  • Offer similar suggestions
  • Read reviews of customers
23
Q

What are the disadvantages of online retailing

A
  • Delivery costs (solution: click and collect)
  • Risk during transit
  • Customers expect quick delivery
  • Need for convenient website
  • Need for distinctive website
  • Technical support in case of crash
  • Need to upload additional information
  • Update stock
24
Q

Give examples of online retailers

A
  • Laithwaite’s UK
  • wine9.com China
  • Pinjiu.com China
  • New York Times Wine Club
  • Sunday Times Wine Club
  • Amazon.com
25
Q

What is global travel retail

A

Located in places where customers are travelling from one country to another: airport, sea port, international railway station, onboard a ship

26
Q

What are the advantages of global travel retail

A
  • Customers have time while waiting for flight
  • Customers want luxury goods they can not find in the other country
27
Q

What are the disadvantages of global travel retail

A
  • Retail space is expensive
  • Lower margin for suppliers
28
Q

Give examples of investment-grade wines

A
  • Bordeaux Premier Cru Classés
  • Burgundy Grands Crus
  • top Napa Valley
29
Q

What is the reason for extreme high prices for investment-grade wine

A

Rarity value

30
Q

What are wine investment companies

A
  • Specialist wine retailers who are allowed a small allocation of rare wines, via the producer or a merchant
  • Brokers who put customers in contact with potential sellers
31
Q

Give examples of fine wine, worth investing

A
  • Bordeaux
  • Burgundy
  • Piemonte
  • Tuscany
  • California
  • Champagne
  • Penfolds Grange, Australia
  • Hill of Grace, Henschke, Australia
32
Q

Define “secondary market”

A

Selling wine on to other investors to make a profit

33
Q

Give examples of wine investment retailers

A

Specialised investment-grade retailer:

  • Cult Wines (Londen, Hong Kong, ..)

Trading exchanges:

  • Liv-Ex (Londen)

Manage wine portfolios (brokers):

  • Amphora portfolio management
  • Cult Wines
  • Sommelier Capital Advisors USA (no need for any knowledge)
34
Q

Who is the hub of wine investing

A

London, but coming under competititon of Hong Kong

35
Q

Give examples of auction houses

A
  • Sotheby’s
  • Christie’s
36
Q

What are the disadvantages of wine investment at auction houses

A
  • Not certain if wine was kept properly
  • Fraud
37
Q

Give examples of wine fraud

A
  • Hardy Rodenstock sold authenticated wine from the collection of Thomas Jefferson
  • Rudy Kurniawan sold vintages of Clos St Denis from Domaine Ponsot that were never released

WSET L4 D2 2024 (14 decks)

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